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| American Medical Systems Reports Record Quarterly Results; New Product Launches Drive Accelerating Sales Growth and Improving Profitability |
| AMERICAN MEDICAL SYSTEMS LOGO
American Medical Systems, Inc. logo. (PRNewsFoto)[AG] MINNEAPOLIS, MN USA | |||
MINNEAPOLIS, July 24 /PRNewswire/ --
American Medical Systems (Nasdaq: AMMD), the leading independent
manufacturer of surgical devices for urologists, reported net sales for the
second quarter ended June 30, 2001, of $28.4 million, a 13.3 percent increase
over sales of $25.1 million in the same quarter last year. Net income in the
second quarter was $1.5 million, or $0.05 per share on a fully diluted basis,
versus a net loss of $765,000 in the year-ago quarter. Second-quarter
earnings before interest, taxes, and amortization (EBITA) increased by
102 percent compared to the year-ago quarter, while the company's EBITA margin
expanded to 22.0 percent versus 12.3 percent in the year-ago quarter.
(Photo: http://www.newscom.com/cgi-bin/prnh/20000710/AMSLOGO )
Douglas W. Kohrs, AMS president and CEO, commented, "We are pleased with
our record-setting second-quarter performance which represented our third
consecutive quarter of accelerating organic sales growth since our initial
public offering. These results evidence both the success of new product
launches, as well as our product line expansion initiatives of the past two
years."
For the first half of 2001, AMS posted net sales of $56.0 million, up
11.8 percent from sales of $50.1 million in the first half of 2000. Net
income for the first half of 2001 was $2.9 million, or $0.10 per share on a
fully diluted basis, versus a net loss of $556,000 in the year-ago period.
EBITA increased by 62 percent in the first half of 2001, and the first half of
2001 EBITA margin expanded to 21.7 percent from 14.9 percent in the first half
of 2000.
Sales growth in the second quarter was fueled by 22 percent growth in the
company's incontinence product line. Within the incontinence category, sales
of sling urethral support products increased 38 percent in the second quarter.
Sales of the company's market-leading erectile dysfunction product line rose
10 percent in the second quarter, while prostate product line sales were down
slightly as a result of customer inventory rebuilding in the year-ago quarter.
"Each of our major product lines benefited from new product launches
during the second quarter," Kohrs commented. "Three important new products --
the SPARC(TM) Sling System for female incontinence, the Prostaject(TM) Ethanol
Injection System for enlarged prostate disease, and a new penile prostheses
product line featuring the Parylene(TM) Micro Coating and Inhibizone(TM)
Antibiotic Surface Treatment for erectile dysfunction -- all contributed to
second quarter revenues."
The improvement in second-quarter profitability was driven by a gross
margin expansion to 79.7 percent of sales compared to 76.9 percent in the
year-ago quarter. Operating expenses also declined as a percent of sales,
representing 60.4 percent of second-quarter 2001 sales versus 63.4 percent of
sales in the year-ago period. Amortization expense increased in the second
quarter to $2.4 million compared to $2.0 million in both the year-ago and
preceding quarters as a result of contingent purchase price payments related
to the acquisition of Influence. Interest expense in the second quarter
declined to $1.0 million from $2.2 million in the year-ago quarter.
"We are very pleased that our rate of profitability is continuing to
improve as we leverage our operating infrastructure with solid sales growth,"
added Kohrs. "In addition, we anticipate that the proceeds of our recent
successful stock offering will reduce our interest expense even further."
On July 3, 2001, AMS received approximately $54.0 million related to the
completion of a follow-on public stock offering on June 27, 2001, of
7,000,000 shares of common stock at $16.40; 3,500,000 shares were sold by the
company, with the balance sold by Warburg, Pincus. The company plans on using
the proceeds from the offering to repay debt and fund growth.
Product Development Update
"AMS had a number of significant product development accomplishments
during the second quarter," added Kohrs. "Overall, we plan to introduce nine
new products during 2001. We now have U.S. regulatory clearance for eight of
these products and expect to obtain 510(k) approval for the ninth, the SPARC
Sling System, later in the third quarter."
The SPARC Sling System is designed to offer a novel, minimally invasive
surgical approach that may provide greater safety over current sling
treatments for women with stress incontinence. AMS began selling this product
in Europe in the second quarter following the late-April receipt of CE Mark
approval. The company also filed a 510(k) submission to the Food and Drug
Administration (FDA) during the second quarter to request marketing clearance
in the United States. The In-Fast Ultra(TM), a lower profile, less invasive,
female sling fixation system, is expected to launch late in the fourth
quarter. The available supply of the Urogen(TM) Dermis Allogaft sling
material, used in both male and female sling products, improved late in the
second quarter. The company expects its dermis supply lines to continually
improve throughout the third quarter.
In the erectile dysfunction area, AMS received the first FDA approval for
an antibiotic coating on an implantable product in the second quarter. AMS
developed the innovative coating to help reduce the risk of infection. The
company launched this coating on its market-leading 700(TM) Series inflatable
penile implants during the quarter. AMS also began enhancing its inflatable
penile implants with Parylene, a coating that strengthens and extends the
service of implants. The company additionally plans a fourth-quarter
introduction of an ergonomic patient-friendly pump for the inflatable penile
implants targeted at individuals with limited manual dexterity.
The company continues to advance its U.S. clinical trials to evaluate the
ProstaJect Ethanol Injection System, a new technology for the treatment of
benign prostatic hyperplasia (BPH or enlarged prostate disease). AMS expects
to enroll 150 patients in the phase I and II study in 2001, and submit
six-month patient data to the FDA in the first quarter of 2002. ProstaJect
was launched in European markets in May 2001.
Outlook
For the third quarter of 2001, Kohrs said AMS anticipates net sales in the
range of $26.7 million to $27.7 million, with EBITA margin expected to be
greater than in the third quarter of 2000 but less than the second-quarter
EBITA margin. The third quarter of each year historically has the lowest
quarterly sales due to seasonality. For the full year 2001, management
anticipates net sales growth of between 14 and 16 percent with EBITA margin
improvement. In addition to the risks and uncertainties described further
below, the company's 2001 sales are subject to specific risks regarding the
availability of dermis supply and foreign currency fluctuations.
Urological Disorders
The three most prevalent urological disorders are male and female
incontinence, erectile dysfunction and enlarged prostate disease.
Approximately 60 million people in the United States suffer from one or more
of these disorders. An estimated 11 million of these people have a disorder
severe enough to be candidates for treatment with AMS products. Although not
life-threatening, these disorders can diminish quality of life significantly.
In recent years, the number of people seeking treatment has increased markedly
as a result of greater awareness of new treatment alternatives, especially new
drug therapies.
About AMS
American Medical Systems (AMS), headquartered in Minneapolis, is a medical
technology company with 500 employees worldwide. AMS products include a large
portfolio of devices to treat both male and female incontinence, devices for
the diagnosis and treatment of erectile dysfunction; devices for urethral
obstruction caused by benign prostatic hyperplasia (BPH or enlarged prostate
disease) and advanced surgical products used in transurethral resection of the
prostate. The company markets its products in more than 60 countries
worldwide. For more information about AMS, visit our Web site at
http://www.visitAMS.com
Except for historical information contained herein, the disclosures in
this news release are forward-looking statements made under the Safe Harbor
Provisions of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from those anticipated. These
risks and uncertainties include: continued use of non-invasive treatment
alternatives; continued physician use and endorsement of the company's
products; increased supply of sling material; increasing penetration of the
penile implant market; successful introduction of new products and product
improvements; actions related to reimbursement for the company's products and
potential product recalls. These risks and other relevant risks are described
in more detail in the company's Registration Statement on Form S-1 dated
June 26, 2001 and its Annual Report on Form 10-K for the year ended
December 31, 2000.
AMERICAN MEDICAL SYSTEMS HOLDINGS, INC.
STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2001 2000 2001 2000
Net sales $28,438 $25,093 $55,986 $50,079
Cost of sales 5,787 5,785 11,184 11,515
Gross profit 22,651 19,308 44,802 38,564
Operating expenses:
Marketing and sales 11,211 10,019 22,620 19,883
General and
administrative 3,077 2,935 5,803 5,629
Research and
development 2,891 2,965 6,081 5,993
Transition and
reorganization
expenses -- 1,000 -- 1,000
Amortization of
intangibles 2,361 2,010 4,561 4,001
Total operating
expenses 19,540 18,929 39,065 36,506
Operating income 3,111 379 5,737 2,058
Royalty and other
income 775 701 1,850 1,427
Interest expense, net (1,016) (2,237) (2,043) (4,081)
Income (loss) before
income taxes 2,870 (1,157) 5,544 (596)
Income tax benefit
(expense) (1,336) 392 (2,606) 40
Net income (loss) $1,534 ($765) $2,938 ($556)
Net income per
share (a) -
basic $0.05 $0.11
diluted $0.05 $0.10
Weighted average
shares used in
computation -
basic 27,938 27,876
diluted 30,064 29,984
EBITA (b) $6,247 $3,090 $12,148 $7,486
EBITA as a percent
of net sales 22.0% 12.3% 21.7% 14.9%
NOTES
(a) No common shares were outstanding during 2000; therefore, no net
income per share is presented.
(b) EBITA consists of net income excluding net interest, taxes, and
amortization of intangibles.
AMERICAN MEDICAL SYSTEMS HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
Assets June 30, December 31,
2001 2000
Current assets: (Unaudited)
Cash and cash equivalents (see note below) $5,375 $12,165
Accounts receivable, net 24,078 23,616
Inventories 11,080 9,674
Deferred taxes and other current assets 5,996 6,050
Total current assets 46,529 51,505
Property, plant and equipment, net 23,719 24,773
Intangibles, net 99,657 97,731
Deferred taxes and other assets 14,374 7,253
Total assets $184,279 $181,262
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $3,374 $2,431
Accrued liabilities and taxes 25,491 24,295
Current portion of notes payable 6,410 6,033
Total current liabilities 35,275 32,759
Long-term notes payable 35,065 38,459
Minority interest 521 521
Other long-term liability 1,503 --
Stockholders' equity (see note below) 111,915 109,523
Total liabilities and stockholders' equity $184,279 $181,262
NOTE
Does not include the receipt on July 3, 2001, of approximately
$54.0 million, and the issuance of 3,500,000 shares of common stock at the
completion of a follow-on public stock offering on June 27, 2001.
AMERICAN MEDICAL SYSTEMS HOLDINGS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands, except share data)
(Unaudited)
For the six months
ended June 30,
2001 2000
Cash flows from operating activities:
Net income (loss) $2,938 ($556)
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 1,909 1,902
Amortization of intangibles, including
deferred financing costs 4,696 4,001
Noncash pension charge 578 786
Noncash deferred compensation 235 191
Income tax benefit related to stock
option plans 149 --
Change in net deferred taxes 1,994 (633)
Changes in operating assets and liabilities (217) (2,497)
Net cash provided by operating activities 12,282 3,194
Cash flows from investing activities:
Purchase of property, plant and equipment (855) (1,150)
Purchase of businesses, net of cash acquired (10,938) (5,308)
Purchase of investments in technology (4,500) --
Purchase of other intangibles -- (1,000)
Net cash used in investing activities (16,293) (7,458)
Cash flows from financing activities:
Issuance of common stock 633 82
Net borrowings on long-term debt (3,017) 2,700
Net cash provided by (used in) financing
activities (2,384) 2,782
Effect of exchange rates (395) (618)
Net decrease in cash and cash equivalents ($6,790) ($2,100)
SOURCE American Medical Systems
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CONTACT:
Greg Melsen, Chief Financial Officer of
American Medical Systems, +1-952-933-4666,
greg.melsen@visitAMS.com , or Marian Briggs, mbriggs@psbpr.com ,
or Nancy A. Johnson, njohnson@psbpr.com , both of Padilla Speer
Beardsley Inc., +1-612-871-8877, for American Medical Systems
